Jersey Unreported Judgments

Saisie judiciaire - compensation and confiscation orders

[2019]JRC175

Royal Court

(Samedi)

12 September 2019

Before     :

J. A. Clyde-Smith O.B.E., Commissioner, and Jurats Blampied, Ramsden, Ronge, Dulake and Averty

The Attorney General

-v-

Richard David Arthur

IN THE MATTER OF THE PROCEEDS OF CRIME (JERSEY) LAW, 1999

AND IN THE MATTER OF A SAISIE JUDICIAIRE IN RESPECT OF THE REALISABLE PROPERTY OF RICHARD DAVID ARTHUR

AND IN THE MATTER OF THE REPRESENTATION OF PAMELA JUNE ARTHUR (née BLAMPIED) AND MAUREEN PATRICIA BRUNKER (née GOODISON)

AND IN THE MATTER OF THE REPRESENTATION OF KATHERINE LOUISE ARTHUR (née BRUNKER)

Advocate D. J. Hopwood for the Attorney General.

Advocate N. B. R. Mière for Richard David Arthur.

Advocate P. G. Nicholls for Pamela Arthur and Maureen Brunker.

Advocate S. B. Wauchope for Katherine Arthru

JUDGMENT

THE commissioner:

1.        On 2^nd July, 2018, the Superior Number of the Royal Court sentenced Richard David Arthur ("the defendant") to a total sentence of seven years' imprisonment for three counts of fraud, three counts of fraudulent conversion and four counts of falsification of accounts, and this for the reasons set out in the Court's judgment of 19^th July 2018 (AG v Arthur [2018] JRC 129).  That sentence was upheld by the Court of Appeal on 28^th November 2018 (Arthur v AG [2019] JCA 217).

2.        At the sentencing hearing, the Attorney General asked the Court to proceed to make a confiscation order under Part 2 of the Proceeds of Crime (Jersey) Law 1999 ("the Proceeds of Crime Law") but to postpone that matter, and potential compensation orders under the provisions of the Criminal Justice (Compensation Orders) (Jersey) Law 1994 ("the Compensation Law"), to a date to be fixed in approximately three months.  A postponement to a date to be fixed was ordered unopposed, but no date was fixed within three months, or indeed at all, until prompted by representations brought by the defendant's mother, Pamela Arthur, and mother-in-law, Maureen Brunker, seeking an order lifting the saisie judiciaire over the assets of the defendant, so that they could enforce judgments they had obtained against those assets.

3.        A brief chronology is as follows:-

(i)        The offences were committed between 2002 and 2009. 

(ii)       The offences came to light in 2009, and the defendant was suspended from his position within BDO on 19^th May 2009.  He was struck off as a chartered accountant, but it was not until 20^th May 2015 that he was charged.

(iii)      Also on 20^th May 2015, the Court imposed a saisie judiciaire over the defendant's realisable property, which included his interest in the matrimonial home that he owned jointly with his wife Katherine Arthur.

(iv)      The matrimonial home was sold on 26^th July 2016.  After payment of a number of joint and other obligations, the Viscount received £703,227.60, being the defendant's half share in the net equity in the matrimonial home.

(v)       The defendant pleaded guilty to ten out of the nineteen charges against him on 25^th April 2018.

(vi)      On 22^nd June 2018, Pamela Arthur obtained judgment against the defendant in the sum of £146,150.86, and this in respect of certain loans made to him.  On the same date, Maureen Brunker obtained judgment against the defendant in the sum of £399,039 in respect of loans she had made to him and Katherine Arthur jointly and severally, together with contractual interest in the sum of £73,066.86, making a total of £472,105.86.

(vii)     The defendant was sentenced on 2^nd July 2018.

(viii)    On 13^th March 2019, Pamela Arthur and Maureen Brunker applied by way of representation for the saisie judiciaire to be lifted to the extent necessary to allow their judgments to be enforced against the defendant's property.  They referred to the provisions of Article 6 of the Proceeds of Crime Law, which provides that the making of a confiscation order cannot be postponed for more than six months after conviction, unless there are exceptional circumstances.  No application for postponement had been made.  The period of six months from the date of the defendant's conviction expired on 25^th October 2018.

(ix)      The representation was first heard on 20^th May 2019, when the Court granted the Attorney General a short postponement of the application for confiscation and compensation orders with the representation being adjourned to the same date and this for the reasons set out in its judgment of the 18^th June 2019 (AG v Arthur [2019] JRC 113)

(x)       On 16^th July 2019, Katherine Arthur applied by way of representation for the saisie judiciaire to be discharged or varied, so that she could receive compensation for financial losses she claimed arose from the defendant's offending.

(xi)      The hearing took place on 13^th August 2019, when the Superior Number of the Royal Court had before it the Attorney General's application for confiscation and compensation orders and the two representations.  The Court dealt with the applications in the round, as they were necessarily inter-connected.

(xii)     At the hearing, the assets held by the Viscount subject to the saisie judiciaire comprised:-

(a)       Cash - £706,135.47

(b)       The defendant's half share in a wine collection, valued at £4,247.50.

(c)       The defendant's half share in an art collection, valued at £4,247.50.

The Attorney General accepted that Katherine Arthur owned the other half share in the wine and art collections.  Accordingly, the total realisable property of the defendant was £714,630.47.  There were no other known assets of the defendant, apart from the possibility of some kind of undefined and unquantified claim against a Mr Adrian Carlston in relation to his property Chestnut Farm, Mont du Ouaisne, in the parish of St Brelade.

4.        There was no issue as to the bona fides of the loans made by Pamela Arthur and Maureen Brunker, both of whom are now elderly, to the defendant and the Court accepted the serious financial impact upon them of their inability to enforce their judgments.

5.        There were three victims of the offences committed by the defendant, by far the largest being a company called Faircliff Property Limited ("Faircliff"), which on the face of the relevant counts in the indictment was defrauded of £1,869,401. The second victim was another company, Library Place Investments Limited ("Library Place"), which again on the face of the indictment was defrauded of £69,000 and the third victim was an individual, a local resident, who again on the face of the indictment was defrauded of £90,000.

6.        A number of preliminary and uncontroversial points can be made in relation to both confiscation and compensation.

Confiscation

7.        Article 4 of the Proceeds of Crime Law provides as follows:-

"4       Amount to be recovered under confiscation order

(1)       Subject to paragraphs (2) and (3), the amount which a defendant is required by a confiscation order to pay (in this Article, "the penalty") shall be the amount assessed by the Court to be the value of the defendant's benefit from the relevant criminal conduct (in paragraph (2), the 'assessed value').

(2)       Where the Court is satisfied that the amount which might be realised at the time when the confiscation order is made is less than the assessed value, the penalty shall be the amount which appears to the Court might be so realised (or, if that amount is nil, a nominal amount).

(3)       Where the Court is satisfied that a victim of the relevant criminal conduct has instituted or intends to institute civil proceedings against the defendant in respect of loss, injury or damage sustained in connection with that conduct, the penalty may be of such lesser amount as the Court thinks fit."

8.        It is well established that three questions arise:-

(i)        Whether or not the defendant benefited from relevant criminal conduct?

(ii)       The value or quantification of that benefit?

(iii)      The sum that was recoverable from the defendant?

See the House of Lords decision in R v May [2008] UKHL 28 as applied in Warren v AG [2014] JCA 080 and other cases.

9.        By Article 1(2A)(a) of the Proceeds of Crime Law:-

"a person benefits from any criminal conduct if that person obtains property as a result of or in connection with the conduct ..." (our emphasis)

10.      A defendant's benefit does not equate to his profit, rather it is the value of what he has obtained, which in turn is understood in the sense of that which he has exercised the rights of an owner, such as the right of disposition or control over the property.  As Lord Neuberger said in the Supreme Court decision of R v Ahmad [2014] UKSC 36 at paragraph 41 in relation to the equivalent legislation:-

"41     Section 76(4) of the 2002 Act provides that a person benefits from conduct 'if he obtains property as a result of or in connection with the conduct'.  In Jennings, at [12] Lord Bingham agreed with Laws LJ in the Court of Appeal that the essence of benefit in that phrase is given by the word 'obtains'.  Thus, one is concerned with what the particular defendant obtained, which is by no means necessarily the same as the totality of what was obtained by the criminal enterprise of which he was a party.  Lord Bingham explained that 'obtain' in this context must ordinarily mean that a defendant 'has obtained property so as to own it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else' - see Jennings at [13] and May at [48(6)]."

11.      It matters not what the defendant has done with property obtained.  As the Supreme Court said in R v Waya [2012] UKSC 51 at paragraph 27 in relation to the equivalent legislation:-

"27     Similarly, it can be accepted that the scheme of the Act, and of previous confiscation legislation, is to focus on the value of the defendant's obtained proceeds of crime, whether retained or not.  It is an important part of the scheme that even if the proceeds have been spent, a confiscation order up to the value of the proceeds will follow against legitimately acquired assets to the extent that they are available for realisation."

12.      In terms of the sum that is actually recoverable from the defendant, Article 2(3) provides that this includes the total value of any property to which the defendant is beneficially entitled, less a number of deductions, which include claims that would be preferential or privileged in a bankruptcy.  Accordingly, and subject to the issue of proportionality to which we will come, the judgment debts of Pamela Arthur and Maureen Brunker would not be deducted from the amount to be recovered by way of a confiscation order.

Compensation

13.      Article 2(1) and (2) of the Compensation Law provides as follows:-

"Compensation orders against convicted persons

(1)       Subject to the provisions of this Law, a court by or before which a person is convicted of an offence, instead of or in addition to dealing with the person in any other way, may, on application or otherwise, make an order (in this Law referred to as a "compensation order") requiring the person to pay compensation for any personal injury, loss or damage resulting from that offence or to make payments for funeral expenses in respect of a death resulting from any such offence, other than a death due to an accident arising out of the presence of a vehicle on a road.

(2)       Subject to paragraph (3), a compensation order shall be of such amount as the court considers appropriate, having regard to any evidence and any representations that are made by or on behalf of the offender, any person who appears to the court to have suffered any personal injury, loss or damage resulting from the offence for which the offender has been convicted or the Attorney General or the Centenier who presented the offender before the court."

14.      Article 3(5) provides:-

"(5)     In determining whether to make a compensation order against any person, and in determining the amount to be paid under such an order, the court shall have regard to the person's means so far as they appear or are made known to the court."

15.      Accordingly, as Logan Martin JA said in Christmas v AG [2013] (2) JLR 174:-

"51     Advocate Jones submitted that there is little authority in the courts of Jersey on the making of compensation orders pursuant to the Criminal Proceedings Law and that the law of England tends to be applied.  In Att. Gen. v Howard (1), Bailhache, Bailiff, sitting with Jurats referred to what is provided in art. 2(1) and identified two general principles.  The second of those principles is that ([2006] JRC008 at paras 13-14):-

'13      ...in England the courts have ... taken the view that a compensation order should not be made unless the sentencer is satisfied that the offender has the financial resources to pay the compensation, either immediately or within a reasonable time.

14       We think these principles are also to be applied in this jurisdiction.'

We respectfully adopt that principle and agree that it should be applied in the present case.  In assessing the amount of any compensation order which might be made pursuant to art. 2(1) and (2), and art. 3(5) of the [Compensation Law], the Royal Court had to be satisfied that the appellant had the financial resources to pay the amount of compensation which was ordered."

16.      That case also established that compensation orders should only be made in simple cases.  Quoting from paragraph 78 and 80:-

"78     Advocate Jones referred again to Att. Gen. v Howard (1) and to the first of the two principles adopted from England.  In respect of the first principle, the Bailiff said in his judgment ([2006] JRC008, at para. 11) 'it appears from English precedents that the courts in that jurisdiction have made compensation orders only in simple cases.'  Advocate Jones also referred to the passage in Archbold, Criminal Pleading, Evidence & Practice, para. 5-419, at 707 (2003 ed.), where it is stated that:-

'although it is open to the court to hear evidence in order to determine questions as to the fact or the amount of loss, the Court of Appeal [in England] has discouraged criminal courts from embarking on complicated investigations'.

We are satisfied that these passages describe a principle which we ought to apply where the justification for the making of a compensation order is in issue.

79       ...

80       Whilst we accept that a compensation order may not be appropriate where there are potentially complicated issues of causation and quantum, ..."

17.      By Article 3(7) of the Proceeds of Crime Law, where the Court makes both a confiscation order and an order for the payment of compensation under Article 2 of the Compensation Law and it appears that there are insufficient means to satisfy both, the Court shall direct that any amount of the compensation as will not be recoverable, shall be paid out of any sums recovered under the confiscation order.

The Attorney General's case

18.      Addressing the first question of benefit and the property "obtained" by the defendant through his criminal conduct, Crown Advocate Hopwood took the figures set out in the relevant counts to which the defendant had pleaded guilty as follows:-

Count	Benefit
2(Faircliff)	£750,000
4(Faircliff)	£492,500
7(Faircliff)	£416,658
11(Faircliff)	£180,243
14(Library Place)	£34,500
15(Victim 3)	£90,000
Total	£1,963,901

19.      We need comment only as follows:-

(i)        The figure in relation to count 4 is slightly less than that contained within the indictment, because credit has been given for £30,000 that was paid for a possibly legitimate purpose, so that the benefit was at least £492,500.

(ii)       The sum of £69,000 transferred from the account of Library Place was divided between the defendant and Mr Alaric Coombs, who subsequently repaid the entire amount.  Following the guidance given in R v Ahmad, this asset was acquired on a several basis, and the defendant's benefit, therefore, has been set at half the amount, namely £34,500.  The defendant has never repaid the £34,500 he obtained, and to that extent, still retains those proceeds of his crime.  Library Place had also made a claim for interest of £5,368 and lawyers' fees of £32,270, which it conceded did not all relate to the recovery of the £69,000.

20.      By paragraph (5) of Article 2 of the Proceeds of Crime Law, the Court's assessment of the value of the defendant's proceeds should include any increase in their value due to inflation since the benefit was obtained:-

"(5)     References in Part 2 to the value at any time (referred to in paragraph (6) as the 'material time') of any property obtained by a person as a result of or in connection with an offence are references to -

(a)       the value of the property to the person when the person obtained it, adjusted to take account of subsequent changes in the value of money...."

21.      By reference to the Jersey Retail Prices Index, Crown Advocate Hopwood has adjusted the value of the defendant's benefit as follows:-

Count	Benefit	Date of benefit	RPI increase to date	Benefit in current values
2(Faircliff)	£750,000	Q1 2002	177.3/107.1	£1,241,596.64
4(Faircliff)	£492,500	Q2 2002	177.3/108.3	£806,281.16
7(Faircliff)	£416,658	Q2 2008	177.3/139	£531,463.77
11(Faircliff)	£180,243	Q2 2008	177.3/139	£229,907.08
14(Library Place)	£34,500	Q3 2009	177.3/139.6	£43,816.98
15(Victim 3)	£90,000	Q3 2009	177.3/139.6	£114,305.16
Total	£1,963,901			£2,967,370.79

22.      Accordingly, Crown Advocate Hopwood assessed the value of the defendant's benefit for the purpose of Article 4 at the adjusted figure of £2,967,370.79 and he sought a confiscation order in the full amount realisable, namely £714,630.47.

23.      In terms of compensation, Victim 3 had received a repayment of £20,000 shortly after he had been defrauded of £90,000, and the Attorney General therefore sought a compensation order in the sum of £70,000 payable out of the sums confiscated, pursuant to Article 3(7) of the Proceeds of Crime Law.  As we state later, it seems to the Court that if compensation is to be paid it should be in the sum adjusted for the change in the value of money.  Using the same Jersey Retail Prices Index, we calculate that amount at £88,904.

24.      In the light of the full repayment of the amount of £69,000 by which Library Place had been defrauded and the limited funds available, Crown Advocate Hopwood did not seek a compensation order in favour of Library Place for the other sums it was claiming over which there would be issues as to causation and quantum. 

25.      The position of Faircliff was not straightforward.  The defendant had entered into a confidential mediated settlement with Faircliff, which was in full and final settlement of past and future claims arising out of these frauds and other claims against him.  Faircliff was not prepared to reveal the terms of that settlement in order not to jeopardise it, although the conveyancing statement for the sale of the matrimonial home shows that it received £1,296,109.35 out of the proceeds.  It was not known what else it may have received, although it stated that it was still "out of pocket" as a result of its dealings with the defendant.  Faircliff has not made a claim for compensation.

26.      Noting that the Court was at liberty to make a compensation award of its own motion, without any formal application pursuant to Article 2(1) of the Compensation Law, Crown Advocate Hopwood invited the Court to consider awarding Faircliff compensation to reflect the loss that it still bears as a result of the defendant's crimes against it.  To the extent that the Court was not prepared to proceed in that way, the monies would not be retained by the defendant, but pursuant to the confiscation order would go into the central confiscation fund established under the Proceeds of Crime Law.

27.      Because the realisable property was insufficient to cover the proposed compensation orders, Crown Advocate Hopwood submitted that the fairest approach would be to apportion the amount available between Victim 3 and Faircliff in the ratio £70,000 to £720,000 (the latter being approximate amount by which Faircliff said it was out of pocket), giving the following amounts:-

Victim 3       £63,321.69

Faircliff         £651,308.78

Total           £714,630.47

28.      Again in the Court's view, these figures, should be adjusted to take account of the change in the value of money, but the ratio would remain the same.

29.      In conclusion, Crown Advocate Hopwood invited the Court to :-

(i)        Declare that the defendant has benefited in the sum of £2,967,370.79;

(ii)       Make a confiscation order in the sum of £714,630.47 against the defendant;

(iii)      Order that compensation be paid to Victim 3 and to Faircliff Property Limited in the sums of £63,321.69 and £651,308.78 respectively;

(iv)      Order that any sums recovered under the confiscation order be applied to satisfy the above compensation orders, in accordance with Article 3(7) of the Proceeds of Crime Law;

(v)       Order that the Viscount realise all of the assets in her possession (save for the property of Mr Carlston);

(vi)      Order that the above financial orders be subject to deduction of the Viscount's reasonable fees and expenses;

(vii)     Order that there be time to pay the orders of six months; and

(viii)    Order that there by a sentence of seven years' imprisonment in default of payment of the confiscation order.

The case of the defendant and representors and the decision

30.      Advocate Miere objected strongly to the default sentence of seven years sought by the Crown when in reality, the Viscount was the only person who could give effect to the orders sought out of the sums held within the saisie judiciare over which the defendant had no control. The Court had some sympathy with that view.

31.      His central submission, however, supported by Advocate Nicholls and Advocate Wauchope, related to Faircliff, because any confiscation or compensation order, which included the amounts by which Faircliff had been defrauded, would amount to the defendant paying twice, bearing in mind that all of Faircliff's claims had been settled by the defendant in a mediated full and final settlement. 

32.      This submission was in our view powerfully supported by the decision of the Supreme Court in Waya.  Working from the judgment of Lord Walker and Sir Anthony Hughes (with whom the majority agreed) and by analogy to our legislation:-

(i)        Article 1 of the First Protocol to the European Convention ("A1P1") provides that:-

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions.  No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

(ii)       It is clear that A1P1 imports via the rule of fair balance that there must be a reasonable relationship of proportionality between the means employed by the State in, inter alia, the deprivation of property as a form of penalty and the legitimate aim which is sought to be realised by the deprivation (paragraph 12).

(iii)      A1P1 is one of the Convention rights to which the Human Rights (Jersey) Law 2000 ("the Human Rights Law") applies, which means that pursuant to Article 4(1), the Proceeds of Crime Law must be "read and given effect in a way which is compatible ..." with A1P1 (paragraph 13).

(iv)      This means that:-

(a)       the Proceeds of Crime Law must be read and given effect in a manner which avoids a violation of A1P1;

(b)       that a confiscation order which did not conform to the test of proportionality would constitute such a violation;

(c)       that it is incumbent upon the domestic court to provide a remedy for any such violation; and

(d)       that the appropriate remedy lies in the duty of the Court not to make an order which involves such a violation (paragraph 14).

(v)       Whilst the legislation constituted a severe regime which would have a deterrent effect on at least some would-be criminals, that did not represent the essence or the "grain" of the legislation. Quoting from paragraph 21 of the judgment:-

"21     ..... It does not, however, follow that its deterrent qualities represent the essence (or the 'grain') of the legislation.  They are, no doubt, an incident of it, but they are not its essence.  Its essence, and its frequently declared purpose, is to remove from criminals the pecuniary proceeds of their crime.  Just one example of such declarations is afforded by the explanatory notes to the statute (para 4):

'The purpose of confiscation proceedings is to recover the financial benefit that the offender has obtained from his criminal conduct.'

22       A confiscation order must therefore bear a proportionate relationship to this purpose.  Lord Bingham recognised this in his seminal speech in R v May, in adding to his 'Endnote' or overview of the regime, at para 48, two balancing propositions:

'The legislation .... Does not provide for confiscation in the sense understood by schoolchildren and others, but nor does it operate by way of fine.'

(vi)      To make a confiscation order when the defendant has restored to the loser any proceeds of crime which he had ever had would be disproportionate.  Quoting from paragraphs 28 and 29 of the judgment:-

"28     The case of a defendant such as was considered in Morgan and Bygrave is, however, a different one.  To make a confiscation order in his case, when he has restored to the loser any proceeds of crime which he had ever had, is disproportionate.  It would not achieve the statutory objective of removing his proceeds of crime but would simply be an additional financial penalty.  That it is consistent with the statutory purpose so to hold is moreover demonstrated by the presence of section 6(6).  This subsection removes the duty to make a confiscation order, and converts it into a discretionary power, wherever the loser whose property represents the defendant's proceeds of crime either has brought, or proposes to bring, civil proceedings to recover his loss.  It may be that the presence of section 6(6) is capable of explanation simply as a means of avoiding any obstacle to a civil action brought by the loser, which risk would not arise if repayment has already been made.  But it would be unfair and capricious, and thus disproportionate, to distinguish between a defendant whose victim was about to sue him and a defendant who had already repaid.  If anything, an order that the same sum be paid again by way of confiscation is more disproportionate in the second case than in the first.  Unlike the first defendant, the second has not forced his victim to resort to litigation.

29       The principle considered above ought to apply equally to other cases where the benefit obtained by the defendant has been wholly restored to the loser.  In such a case a confiscation order which requires him to pay the same sum again does not achieve the object of the legislation of removing from the defendant his proceeds of crime, but amounts simply to a further pecuniary penalty - in any ordinary language a fine.  It is for that reason disproportionate.  If he obtained other benefit, then an order confiscating that is a different matter."

33.      As the Court of Appeal said in R v Jawad [2013] EWCA Crim 644 at paragraph 21:-

"21     Waya requires the court to consider whether a POCA confiscation order is disproportionate.  We are satisfied that it generally will be disproportionate if it will require the defendant to pay for a second time money which he has fully restored to the loser.  If there is no additional benefit beyond that sum, any POCA confiscation order is likely to be disproportionate.  If there is additional benefit, an order which double counts the sum which has been repaid is likely, to that extent, to be disproportionate, and an order for the lesser sum which excludes the double counting ought generally to be the right order. ..."

34.      Advocate Miere also referred us to the Court of Appeal decision in R v Davenport [2015] EWCA Crim 1731, where Lord Justice Davis gave this guidance, when the Crown was seeking both a compensation order and a confiscation order:-

"1)      The Court is empowered to make both a confiscation order and a compensation order.

2)        However, the court should be alert to any risk of double counting inherent in such a combination of orders and should be alert to the risk of making a confiscation order which is disproportionate.

3)        The court ordinarily should not make both a compensation order and a confiscation order representing the full amount of the benefit where there has been actual restitution to the victims prior to the date of the confiscation hearing: Waya, Jawad.

4)        ..."

35.      Faircliff may regard itself as out of pocket in a non-legal sense, but applying basic principles of contract law, once it has entered into a full and final settlement with the defendant of all claims past and future arising out of these frauds, then these claims are extinguished, and are replaced by the terms of the settlement itself.  There is no allegation that the defendant had reneged on his obligations under the settlement.

36.      The upshot, therefore, is that Faircliff now has no claims against the defendant, and has no loss to be compensated for; hence, no claim for compensation being made by it.  In the Court's view such a claim could not be sustained.  The Court would not be compensating Faircliff, but in effect, donating monies to it.

37.      Following Waya, for the Court to make either a confiscation order or a compensation order when the defendant has fully settled Faircliff's claims would be disproportionate.  To make such orders would require the defendant to pay for a second time money which has been fully restored to Faircliff.  It would amount to an additional financial penalty, and not serve the purpose of removing from the defendant the pecuniary proceeds of his crimes.

38.      In our view, this submission must succeed, and we decline, therefore, to make a confiscation order or a compensation order in respect of the amounts by which Faircliff was defrauded. 

39.      Advocate Miere made a number of further submissions:-

(i)        He was critical of the way the Crown had adjusted the benefit figures to take into account the change in the value of money.  He had no confidence in the calculations and taking into account the length of time that had elapsed from the date that these frauds took place and the delays in bringing this matter to Court, he said there should be no adjustment made.

In the Court's view, Article 2(5) of the Proceeds of Crime Law requires the value of property obtained to be adjusted to take into account the changes in the value of money, and, bearing in mind the purpose of the legislation to remove from criminals the pecuniary proceeds of their crime, there was every reason why that should be done.  Crown Advocate Hopwood set out the RPI Index numbers for the whole of the period concerned, and we had no difficulty in following the way he had carried out his calculations, which we accepted.  No one had drawn to our attention any errors in the way these calculations had been undertaken.

(ii)       Advocate Miere attempted to work backwards, addressing the issue of compensation first, and the issue of benefit last, arguing that because any confiscation or compensation orders in relation to Faircliff would be disproportionate, the sums involved in the Faircliff frauds should be excluded from the benefit figures.

We reject that approach.  The first question to be addressed is whether the defendant has benefited from the frauds, i.e. what he has obtained.  As the Supreme Court said in Waya, it was irrelevant what he subsequently did with the sums he had obtained.  The Faircliff frauds were properly included in the benefit figures.

(iii)      Whilst accepting that Victim 3 should receive compensation, but in the unadjusted figure of £70,000, Advocate Miere argued that there should be no confiscation order in respect of Library Place, because pursuant to Article 4(3) of the Proceeds of Crime Law, the defendant was exposed to the possibility of a civil claim by Library Place for the interest and costs it alleged it had suffered.

However, Article 4(3) requires the Court to be "satisfied that a victim of the relevant criminal conduct has instituted or intends to institute civil proceedings against the defendant" and we had no evidence at all that any such claim had been intimated against the defendant.

(iv)      Whilst Mr Coombs had repaid the whole of the sum taken from Library Place, Advocate Miere argued that the defendant was exposed to a civil action by Mr Coombs for a contribution to that amount.  It would be disproportionate, therefore, for a confiscation order to be made in the amount by which the defendant had benefited, because he may have to pay that sum again to Mr Coombs.

There was no evidence that Mr Coombs had threatened such a claim against the defendant, but in any event, under Article 4(3) of the Proceeds of Crime Law, the Court can only take into account civil proceedings that may be instituted by a victim of the criminal conduct and Mr Coombs was not a victim.

(v)       Advocate Miere pointed out, as did Advocate Nicholls and Advocate Wauchope, that the making of a confiscation order was permissive, and all three counsel emphasised the delays that had taken place in this matter.  There was no question that the Attorney General had failed to apply for the postponement of the confiscation proceedings, as required by Article 6 of the Proceeds of Crime Law, and the Court expressed criticism of this in paragraph 31 of the judgment of 18^th June 2018.  However, these were serious frauds committed by the defendant which had brought discredit upon the Island's finance industry and there was no question in the Court's mind that confiscation orders should be made in order to deprive him of the pecuniary proceeds of his crimes, where it was proportionate to do so.

40.      Advocate Nicholls accepted that his clients' claims against the defendant could not be deducted from the assets to be realised at the time a confiscation order is made, pursuant to Article 2(3) of the Proceeds of Crime Law and therefore, the ability of his clients to enforce their judgments against the assets subject to the saisie judiciaire was dependent upon the extent to which Advocate Miere was successful in his central submissions in relation to Faircliff. 

41.      He accepted that his clients were not victims of the defendant's crimes; no fraud had been perpetrated upon them, and therefore they had no locus to bring claims for compensation under the provisions of the Compensation Law.  He accepted that Victim 3 should be compensated, but in the unadjusted figure of £70,000.

42.      Advocate Wauchope described Katherine Arthur, who remained married to the defendant, as the victim of his frauds and a person directly affected by the orders being sought by the Crown.  She remained liable to repay the loans made by her mother Maureen Brunker as they were made to the defendant and her jointly and severally and had incurred the following legal fees, and share of the Viscount's fees, pursuant to the saisie judicaire:-

1.             Share of Viscount's expenses     :           £7,534.00

2.             Share of Viscount's lawyers' fees:           £5,250.00

3.             Lawyers' fees paid                                 £38,398.68

Total                                                    £51,182.68

43.      He argued that she would not have suffered these losses but for the defendant's crimes, and they therefore represented "loss or damage resulting from that offence" for the purposes of Article 2(1) of the Compensation Law.

44.      Katherine Arthur's position was that the realisable property of £714,613.47 should be equitably dealt with as follows:-

Victim 3                                        £70,000.00

Maureen Brunker                           £472,495.80

Pamela June Arthur                       £146,150.86

Katherine Arthur                            £25,983.81

45.      In essence, she would receive the residue of the realisable property after compensation for Victim 3 and the undisputed claims of the judgment creditors, which would have the effect of releasing her from her liability to her mother.

46.      The Court appreciates the devastating effect these events must have had on the defendant's wife and children, but in our view, the Compensation Law is designed to provide compensation to the victims of crimes for which a person has been convicted, and no fraud was perpetrated upon the defendant's wife.  Her loss does not result from the frauds he has been convicted of, but from the financial consequences to him of his conduct, i.e. the loss of his position at BDO and his incarceration in prison.  In any event, her claims raise issues of causation and quantum that are inappropriate to be dealt with by way of a compensation order.  For these reasons, we decline to make a compensation order in her favour.

47.      Turning therefore to our decision in relation to Library Place and Victim 3, we agree that no compensation order should be made in favour of Library Place, because its claim was settled in full by Mr Coombs and its further claims for interest and legal costs raise issues of causation and quantum which are inappropriate to deal with by way of a compensation order. 

48.      However, we accept that the defendant has retained the benefit of his share of the assets defrauded from Library Place and it is appropriate, therefore, that a confiscation order should be made in the amount of that benefit, adjusted to take into account the change in the value of money, namely in the sum of £43,816.98.  This does not amount to ordering the defendant to pay for a second time as it was Mr Coombs, not the defendant, who has restored the sums taken from Library Place. A confiscation order against the defendant, who retains the benefit of his share of the monies taken, would not be disproportionate.

49.      In relation to Victim 3, the defendant obtained the sum of £90,000 in September 2009, of which £20,000 was repaid shortly thereafter, and it is appropriate for Victim 3 to receive compensation for the loss of the balance of £70,000. However an order that he receive compensation in that sum would be to ignore the reduction on the value of money in the intervening ten years. £70,000 in 2009 would have the equivalent value and buying power today of £88,904.

50.      The purpose of the Compensation Law is to compensate victims of crime for their loss and we see no reason to construe the word "loss" in Article 2(1) restrictively to the prejudice of the victim and to the benefit of the defendant.  We note the wide discretion given to the Court to make an order "of such amount as the court considers appropriate" and in our view fairness requires that Victim 3 receives by way of compensation property of the same value to that taken from him ten years ago.  We will therefore make a compensation order in favour of Victim 3 in the sum of £88,904.

51.      The next question is whether we should also make a confiscation order in the same sum as there is realisable property now available to meet such an order.  We conclude that we should not.  Payment by the defendant of the compensation order in the sum of £88,904 will fully restore the loss suffered by Victim 3 and no issue arises as to whether it will in fact be paid as it will be paid by the Viscount out of the sums held within the saisie judiciare. To make a confiscation order in addition would require the defendant to pay for a second time and following Waya that would be disproportionate.

Conclusion

52.      In conclusion, the Court will make a confiscation order in the sum of £43,816.98 (Library Place) and a compensation order in favour of Victim 3 in the sum of £88,904, so that in total £132,720.98 will be paid out of the sums held by the Viscount in relation to the confiscation and compensation orders.  After the deduction of the Viscount's fees and expenses, the balance will be released from the saisie judiciare so that, Pamela Arthur and Maureen Brunker can enforce their judgments against it, to be divided between them pro rata to their claims.

53.      We therefore:-

(i)         declare that the defendant has benefited in the sum of £2,967,370.79. 

(ii)       make a confiscation order in the sum of £43,816.98.

(iii)      make a compensation order in favour of Victim 3 in the sum of £88,904.

54.      The Court will order the Viscount to:-

(i)        realise the assets subject to the saisie judiciaire save for the property of Mr Carlston which will be released to him;

(ii)       pay the amount of the confiscation order into the Criminal Offences Confiscations Fund, pursuant to Article 20 of the Proceeds of Crime Law;

(iii)      pay the sum of £88,904 to Victim 3, pursuant to the Compensation order in his favour;

(iv)      Deduct her reasonable fees and expenses.

55.      The Court will further order the lifting of the saisie judiciaire over the balance of the funds held by the Viscount pursuant to the above orders, but order the Viscount to retain the same, so that Pamela Arthur and Maureen Brunker can enforce their judgments against that balance.

56.      In the light of the above no orders are in our view necessary under the two representations, but to the extent that any orders are sought by the representors, those will be dealt with by the Court reconstituting itself as the Inferior Number, comprising the Commissioner and Jurats Blampied and Ramsden.

Authorities

AG v Arthur [2018] JRC 129. 

Arthur v AG [2019] JCA 217. 

Proceeds of Crime (Jersey) Law 1999. 

Criminal Justice (Compensation Orders) (Jersey) Law 1994. 

R v May [2008] UKHL 28. 

Warren v AG [2014] JCA 080. 

R v Ahmad [2014] UKSC 36. 

R v Waya [2012] UKSC 51. 

Christmas v AG [2013] (2) JLR 174. 

R v Jawad [2013] EWCA Crim 644

R v Davenport [2015] EWCA Crim 1731.